Posted this over on /r/personalfinance with no help, hoping someone can steer me in the right direction here.
I own an LLC with an S election. I'm the sole employee and will be in the foreseeable future. 34 years old (if that matters), only debt is a condo (owe $98k @ 4.75%) and a car (owe $10k @ 4.99%), and I have a solid emergency fund (6+ months of expenses). I have another job which does not offer a 401k.
I pay myself $36,000, $18,000 in W2 wages and half in distributions. I've been contributing the max $5,500 to a Traditional IRA each previous year for the tax break. For 2016 I chose to open a Roth IRA because in all likelihood my tax rate in the future won't be nearly as low as it is now. I plan on investing the $5,500 in this from now on.
My goal for 2017 is to up that yearly contribution from the $5,500 to $12,000, so I'm looking for the 'next step'. It's looking like the best option for me will be an SEP, allowing the company to contribute 25% of my W2 wages (25% of $18k = $4,500) and taking the tax break for it.
1) Is this my 'best move' for the additional funds? 2) Is the tax deduction from the SEP contribution different from the tax deduction from the Traditional IRA (aside from the amount, obviously)? 3) What should I do with the remaining $2,000 of my $12,000 investment goal.
Side Note: Normally I'd consider paying off the car and investing the payment amount each month, but I'm planning on selling it and buying a different car. I'm a poster boy for frugal living, my car is my 'live a little' expense :)
Submitted January 18, 2017 at 11:02AM by DestituteKetchup http://ift.tt/2jZYX1i
